What is Earnest Money, and Why is it Important?

The home buying process can be complicated. There are so many details that we know are hard to understand, and maybe you haven’t heard before! At Alise Roberts and Company, we want to make sure that you not only find the house of your dreams, or sell your own home, but that it is an exciting journey with as little stress as possible. 


One of the key terms that you’ll need to know when finding the home of your dreams, is earnest money. Earnest money is a deposit you pay to show the seller that you are serious and that you will make a good faith effort to follow through and close. You’ll want to really be mindful about what you’re putting down for earnest money — typically 1-5% of the purchase price — because the higher the earnest, the more appealing your offer might be. And when you’re putting in an offer for a house, you’re going to want to make sure that your offer is the best in every way! 

It’s really important that you are prepared to put down earnest money, and have these funds available and ready to be deposited as soon as you make an offer. When your offer is accepted, the money will be deposited with the escrow company via check, or wire from your account. 

Is earnest money required during the process of purchasing a home? No, but its no secret that it makes your offer look much more impressive. It’s always a good idea to put some money in the game to make sure that the buyer knows how serious you are. 


Sure, it seems pretty simple! However, there are a few key things to remember about your earnest money. If you end up terminating the transaction without legal excuse, your earnest money may be forfeited to the seller.

There are some things that you can do to protect yourself from losing your earnest money. It’s always best if you can include protections for your earnest money such as financing and inspection contingencies. These things will allow you to verify that the home is sound, and valued at the price you are willing to pay. 

The best part is that if everything goes well and the deal closes, the earnest money will be applied to your down payment or the closing costs! Essentially, earnest money is very important, and you need to make sure that you’re in a place where you can pay enough to make your offer really stand out, but in the end, all of that money is really put toward your home! 

We hope that this post helps you in your home buying process! At Alise Roberts and Company, we love helping buyers understand the full process of purchasing a home. Give us a call or shoot us an email if you’d like to know how we help protect our buyer's earnest money and simple things you can do to make an offer appealing.